The EU referendum poses some interesting challenges for technicians as polls and sentiment are hard to track. Among the big movers this week were the pound and UK stocks, which have both been affected by surveys showing Brits are leaning towards the Leave camp.

EURGBP

Continuing from the post on the 10th, we saw a break of the bullish flag formation which saw prices get as high as 0.7986 just one pip away from the 76.4% retracement. Evidently we can see price struggle to make further gains at this retracement level after the accelerated move. The market seems to be in a period of indecisiveness as we look to consolidate the recent gains made, with the information that Britain could be ever closer to an EU exit.  

EURGBP_Jun15_1

EURGBP_Jun15_2

At present price activity is holding the recent rising trend, should this test validate the strength of this trend we could be poised to test the recent highs of 0.7986, however the previous days doji candle could suggest further weakness as this candle resides at the top of the trend. With this in mind should selling pressure continue short term support  could be found at 0.7905/0.7875. With poll data releases changing the sentiment of this market on a whim traders could certainly see extended volatility in this cross.

FTSE

With the FTSE failing succumb the 6295/6300 level on  numerous occasions the bears have taken full control of this market, seeing the FTSE fall 6.6% from its swing high on the 7th. This bearish activity saw the RSI push into oversold territory potentially suggesting the recent move may be overdone. This recent sell off  picked up steam once the pivotal support zone of  6075/6050 broke strengthening the premise that the bears had this market by the horns.

FTSE_Jun15_1

FTSE_Jun15_2
At present there has been a small rebound with the market finding short term support at 5900/5920 which ties in nicely with the lows at the confluence of trade at the latter part of February. For the time being the market is digesting the idea of a UK exit of the European union and should polls remain constant we could be in a period of consolidation until the vote. However, with the jitters of a brexit prevalent, sentiment is on a knifes edge and price activity could swing in either direction. Support remains at 5900 with pivotal resistance at 6075/6100.

Added market volatility means increased opportunity but also more risk. To reflect this, ETX Capital may be increasing margin rates on certain markets.

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